|  | | 2006 News and Press Releases | | |
HEADLINE NEWS:
Stock Option Probes Widen, But D&O Rates Remain Stable
Rupal Parekh
Business Insurance. November 27, 2006
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EXCERPT: Carl Pursiano, senior vp at Liberty International Underwriters in New York, said among the issues the insurer will consider at renewals is the way a company manages itself, such as ensuring timely financial filings with regulators, and ``whether or not the company is currently being investigated by the SEC, the DOJ, the FBI, or plaintiffs firms'' or if the company ``has been under scrutiny by the media as well.'' ``I don't think in and of itself the stock options scandal is going to move the needle much on the pricing of D&O,'' said Mr. Pursiano. But, that's ``against a backdrop'' of reduced securities litigation filings overall, Mr. Pursiano noted. The Stanford Law School Securities Class Action Clearinghouse of Palo Alto, Calif.-in cooperation with Cornerstone Research of Boston-earlier this year estimated a 36% drop in the historical average of securities fraud class-action lawsuits, from an average of 194 filings between 1996 and 2005 down to an estimated 123 filings for 2006 (BI, July 31). ``If the number reverts back to the mean, and then you throw in the stock option claims, which seem to be continuing, we could see a bit of moderate firming for the pricing of D&O,'' Mr. Pursiano said. ``We're probably about halfway through the emergence of the litigation associated with stock options,'' and ``we are going to see more cases filed particularly between now and the first half of next year,'' Mr. Pursiano predicted. What will make insurers particularly uncomfortable is if when those claims trickle in, there is also a reversion back to higher numbers of securities suits filed in the coming year-``that will have an impact on pricing'' in 2007, he said. |
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